01—Abstract
Summary
Summary of the 10-Q filed November 5, 2021. Cited figures are marked; the original filing is the authoritative source.
Expedia Group, Inc. (EXPE) reported a significant recovery in its third quarter and year-to-date results for 2021, following the severe impact of COVID-19 in 2020.
Revenue for the three months ended September 30, 2021, more than doubled to $2,962 million compared to $1,504 milliona in the prior year period, demonstrating a strong rebound in travel demand. This revenue growth was broad-based across its Retail, B2B, and trivago segments. The company also returned to profitability, reporting an operating income of $524 million and net income of $378 million for the quarter, a substantial improvement from the operating loss and net loss recorded in the same period of 2020.
The nine-month period ending September 30, 2021, also showed substantial improvement, with revenue growing to $6,319 millionb from $4,279 million in 2020. While the nine-month period still reported a net loss of $380 million, this is a significant reduction from the $2,337 million loss in 2020, indicating a positive trend towards recovery. The company's cash flow from operations also saw a dramatic swing, from a use of $3,449 million in the first nine months of 2020 to a source of $3,463 million in the same period of 2021, highlighting improved working capital management and operational performance.
02—Key points
Key Highlights
- Revenue surged by 97% to $2,962 million in Q3 2021 compared to $1,504 million in Q3 2020, indicating a strong recovery in travel demand.
- The company returned to profitability with an operating income of $524 million in Q3 2021, a significant improvement from an operating loss of $113 million in Q3 2020.
- Net income for Q3 2021 was $378 million, a substantial turnaround from a net loss of $200 million in the prior year period.
- For the first nine months of 2021, revenue increased by 48% to $6,319 million, and the net loss narrowed to $380 million from $2,337 million in the same period of 2020.
- Cash flow from operating activities saw a significant positive swing, moving from a usage of $3,449 million in the first nine months of 2020 to a generation of $3,463 million in the first nine months of 2021.
- The company completed the sale of its B2B corporate travel arm, Egencia, on November 1, 2021, which is expected to result in a significant gain in the fourth quarter.
- Debt refinancing activities occurred, including the issuance of $1 billion in 0% Convertible Senior Notes and $1 billion in 2.95% Senior Notes, and the redemption of higher-cost debt.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed November 5, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $2.96B$1.50B | +96.9% |
| Operating Income | $524.00M-$113.00M | +563.7% |
| Interest Expense | $86.00M$113.00M | −23.9% |
| Net Income | $376.00M-$192.00M | +295.8% |
| EPS (Basic) | $2.40$-1.56 | +253.8% |
| EPS (Diluted) | $2.26$-1.56 | +244.9% |
| Shares Outstanding (Basic) | 151.02M141.31M | +6.9% |
| Shares Outstanding (Diluted) | 160.46M141.31M | +13.6% |
05—Questions
Frequently Asked Questions
What was the primary driver of Expedia's revenue growth in Q3 2021?
The primary driver of Expedia's revenue growth in Q3 2021 was the significant recovery in travel demand across all its segments: Retail, B2B, and trivago. This was evidenced by a 97% increase in total revenue to $2,962 million compared to the same period in 2020, with lodging revenue increasing by 87% and air revenue by 128%.
How has COVID-19 continued to impact Expedia's financial performance in Q3 2021?
While the impact of COVID-19 has moderated significantly, it continued to influence performance. The company noted that booking trends for lodging, air, and other travel products decreased sequentially in Q3 2021 compared to Q2 2021, largely due to the impact of the COVID-19 delta variant. However, overall performance showed substantial year-over-year improvement compared to the pandemic-stricken periods of 2020.
What significant debt management activities did Expedia undertake during the period?
Expedia undertook several debt management activities, including the issuance of $1 billion in 0% Convertible Senior Notes due 2026 and $1 billion in 2.95% Senior Notes due 2031. Additionally, the company redeemed its 7.0% Senior Notes and completed a tender offer for its 6.25% Senior Notes, resulting in a loss on debt extinguishment of $280 million for the nine months ended September 30, 2021.
What is the status of the Egencia divestiture?
Expedia Group completed the sale of its corporate travel arm, Egencia, on November 1, 2021. As part of the transaction, Expedia Group received a minority ownership position in the combined business and entered into a 10-year lodging supply agreement with the buyer, American Express Global Business Travel (GBT). The company anticipates recognizing a significant gain on sale in the fourth quarter of 2021.
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